Mastery is not achieved by knowing the Holy Grail of trading systems. Mastery is achieved by having the discipline to put in writing your own trading system, learning to overcome a lot of potentially costly enemies within yourself and then following your system.
A few years ago, I conducted an anonymous survey of 80 investors in one of my classes. I asked them to write down anything and everything that they suspected was preventing themselves from becoming the very best investor they felt they could be. The feedback was overwhelming but also enlightening, and it significantly helped me in my own personal growth as a trader. What I discovered from that survey was that we all have “enemies within” that can be categorized in one of four baskets:
- Planning roadblocks
- Knowledge and education issues
- Personal psychological baggage
- Execution barriers
In the coming weeks, I’ll explain each of these four baskets in depth. This week, I want to focus on the first one: planning roadblocks.
- An ability to laser focus on an issue at hand
- Validated knowledge
- Regular practice until the tasks become automatic and subconscious
- Calm confidence and courage to summon personal action
Compare these classic four elements to the four baskets into which the “enemies within” separated themselves. The parallels are both obvious and ominous. As Jesse Livermore was famous for saying: “Know yourself before you trade. The market is an expensive place to learn.”
Most “market wizards” will tell you (per Jack Schwager’s book by the same name) that with hard work and an ability for brutally honest self-assessment, nearly anyone can become a profitable trader. Some will even become supertraders. Note that both parts are required for this recipe: one large fixing of hard work mixed together with a big pinch of brutal honesty.
I want to share with you some of planning roadblocks gleaned from my survey. As you read these confessions from 80 investors much like you, ask yourself this question: “which of these enemies within applies to me?” Here’s what they admitted to me:
- I like to plan my trades in my head. I hate writing them down.
- I hate taxes but I pay them. I don’t consider tax consequences or plan for taxes when I trade.
- I love tech stocks. My asset allocation is always off-kilter because I overweight tech stocks.
- I bounce around with the market winds. I have no niche or investment focus.
- I’m not good with rules. I don’t really have any trading rules.
- I’m not sure what money management is, and I don’t think I have any.
- I’m a little disorganized. Actually, I may not have any organizational skills at all.
- I’m relatively organized, but I just don’t write things down.
- I have too many different trading plans. I think I don’t focus very well.
- I don’t have enough time to complete my daily and weekly routines.
- I have an investing plan for buying stocks but not for selling them.
So, did you see yourself in any of these planning roadblocks? Go back and reread the introductory paragraph of this blog. Please believe me: you can achieve mastery over your investments, but you must start with yourself.
I wish you the fearlessness in spirit and the resolution of grittiness to tackle your “enemies within”. It will be worth it!
Trade well; trade with discipline!
-- Gatis Roze